When will farm bill put money in growers' pockets?

Doreen Muzzi | May 08, 2002

"It’s impossible to write a one shoe fits all policy that meets everyone’s needs across all state and commodity lines," says Earl Williams, president/CEO of The California Cotton Ginners and Growers Associations. "But with good discussion, a lot of give and take and compromise on many issues, I think that this farm bill very adequately helps address the seriously depressed economic times in the California cotton industry. It also puts back in place the very important safety net on grower prices that was taken away in the 1996 farm bill."

It may take some serious finger punching on your pocket calculator, though, to determine exactly how much assistance you can expect from the government this year.

Under the proposed 2002 farm bill, most growers will receive a reduced, fixed payment and, assuming commodity prices stay below loan levels, a counter-cyclical payment. While any AMTA payment growers have already received for their 2002 crop will count against this year’s direct payment, under the proposed legislation. The target price portion of the bill, also referred to as the counter-cyclical payment, is a separate issue. Because the level of fixed payment in this new bill is higher than what growers may have already received, they will receive the difference in the two payments.

Hunter Moorhead, aide to Sen. Thad Cochran, R-Miss., says, "Farmers have received their AMTA payment under the current farm program. The next payment will likely be a fixed payment that will provide farmers with the difference in the current AMTA payment and the fixed payment in the new Farm Security and Rural Investment Act."

What that means is that any advance government payment producers received for their 2002 crop will be deducted from any payments they are due under the new farm program.

Paid difference

For example, if a cotton grower received a 5.99-cent-per-pound advance AMTA payment in December, that amount will be deducted from the 6.67-cent-per-pound direct payment authorized by the new farm bill, and the difference will be paid to the producer.

Then assuming cotton doesn’t go above the loan rate, the 52-cent loan rate is added to the 6.67-cent direct payment, which will then be subtracted from the 72.4-cent target price set for cotton in the new bill, to determine a grower’s counter cyclical payment.

The math works the same for most of the other major row crop commodities, including rice, soybeans, corn, wheat and sorghum.

The payment limitation provisions of the new bill, Moorhead says, will not take affect until the 2003 crop year.

So when can growers expect to see any money from the new farm bill, assuming it is signed into law in the immediate future?

The balance of the fixed payment for the 2002 crop could be in growers’ hands within about 30 days of the farm bill being signed into law and the first counter cyclical payments could go out as early as September, according to some in Washington, D.C.

Williams sees the implementation and payment days as still somewhat up in the air. "Many growers have already received advances on the 2002 crop under the current program. Balance of the 2002 fixed payment or AMTA payment would be due in October allowing plenty of time to switch over to new program payment levels and allow for said adjustments in final payments due in October," he says.

Positive impact

As for the new counter cyclical payments, Williams says producers can request and receive up to 35 percent of the projected payment in October of the year the crop is harvested, allowing plenty of time to get everything in place at the FSA office before initial payments are available this October. "Bottom line, I think this program will have an immediate and positive financial impact on this industry, its lenders, and all of its infrastructure. It’s been long in coming and it will be welcomed," he says.

At an April 29 press conference Agriculture Secretary Ann Veneman told farmers they shouldn't expect to see their first checks from the new $180 billion farm bill for several months. "I don't think farmers should be anticipating that they'll get checks in August, but I think it's too early at this point to give any kind of time frame," she says.

Veneman says her department will work quickly to implement the programs changes, including a new counter-cyclical payment provision, and a new policy allowing producers to update the planting records used to determine the sizes of their payments.

Moorhead says he too is confident that the professionals at USDA will implement the farm bill in a timely fashion, providing farmers with much needed support. Implementing the new farm bill will require USDA to develop computer software and educate county Farm Service Agency offices regarding new programs and options for agricultural producers.

Beginning in the 2003 crop year, producers may elect to receive up to 50 percent of the direct payment beginning Dec. 1 of the year prior to the year the crop is harvested. The counter cyclical payments are scheduled to be paid incrementally with 35 percent of the projected payments paid in October of the year the crop is harvested, an additional 35 percent paid in February of the following year, and the balance paid at the end of the 12-month marketing year for the specific crop.